Indonesia hedging rules confuse bond market

Author: Ashley Lee | Published: 30 Apr 2015

A lack of clarity over Indonesia’s new hedging rules and issuance restrictions for high-yield bonds could stall the country’s market according to the region’s market participants.

The new hedging rules, released in October last year will come into force on January 1 2016 for bonds and loans. They require Indonesian corporate borrowers to hedge their foreign currency liabilities with an Indonesian bank, and borrowers must be rated higher than BB-.

Market participants were immediately concerned about what this could mean for the country’s high-yield issuers. And further rules issued in January have not calmed their fears.

Speaking at the IFLR Southeast Asia Forum...